Storengy

Storengy’s Kavala UGS tender exit prompts formation changes

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A decision by France’s Storengy (Engie) to not participate in a forthcoming tender offering an underground natural gas storage facility (UGS) license for the almost depleted South Kavala offshore natural gas field in the country’s north has prompted a domino effect of formation changes by groups of investors planning to bid.

GEK TERNA appears to have formed an association with gas grid operator DESFA for the tender after having previously agreed to join forces with Energean Oil & Gas and Storengy.

Energean Oil & Gas, holding a license for the virtually depleted South Kavala field, has not remained an onlooker. The company has also found a partner, believed to be domestic, from the construction sector, according to sources.

To date, Energean Oil & Gas has held talks with three major groups, Mytilineos, AVAX and Aktor, the same sources added.

A Chinese investor is also believed to be interested in the South Kavala UGS tender, staged by privatization fund TAIPED, but will not link up with any partners.

The tender is offering rights for the use, development and exploitation of the virtually depleted offshore natural gas field south of Kavala as a UGS facility for a period of up to 50 years.

Participants must submit first-round, non-binding offers by October 19 following three deadline extensions.

Storengy exits UGS tender, partners seek new operator

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France’s Storengy appears to have stepped back from an upcoming tender for the privatization of an underground natural gas storage facility (UGS) at an almost depleted South Kavala offshore natural gas field in the country’s north, energypress understands.

Storengy, a subsidiary of the Engie group, had formed a three-member consortium with Energean Oil & Gas, holder of the South Kavala field’s license, and construction firm GEK-Terna for this tender.

Storengy’s apparent decision to withdraw from the South Kavala tender may be linked to a decision reached two years earlier by Engie for a revision of its international interests and investment plans.

Energean Oil & Gas and GEK-Terna, Storengy’s two partners for the South Kavala tender, remain interested in expressing first-round interest by a September 30 deadline, but to do so, they must find a new partner, a certified gas grid operator, as required by the tender’s regulations.

The two players have subsequently moved closer to gas grid operator DESFA, already eyeing this tender. According to sources, talks between the two sides have commenced. DESFA will need to hold a stake of at least 20 percent in any partnership formed.

Both sides are also believed to be considering other partnership options. Storengy’s withdrawal could also bring in unanticipated European operators.

Investments of approximately 300 to 400 million euros will be needed to develop the South Kavala UGS.

Two, possibly three, bidders for South Kavala UGS license

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An upcoming tender to offer an underground natural gas storage facility (UGS) license for the almost depleted South Kavala offshore natural gas field in the country’s north is expected to attract the interest of two, or possibly three, bidding teams.

Interested parties have been given an extension to express non-binding first-round interest. Prospective participants are busy preparing.

The participation of Storengy – a three-member consortium formed by France’s Engie, Energean Oil & Gas, holder of the South Kavala field’s license, and construction firm GEK-Terna – is considered a certainty as this consortium was established in anticipation of this tender.

Greek gas grid operator DESFA, increasingly active, since its privatization, in various projects, including some beyond its more customary operator-related bounds, is seen as another certain bidder for the South Kavala UGS license.

Senfluga, the consortium of companies that acquired a 66 percent stake of DESFA, appears very interested in the South Kavala UGS tender. This consortium’s current line-up is comprised of: Snam (54%), Enagas (18%), Fluxys (18%) and Copelouzos group member Damco (10%).

Though Senfluga’s three foreign partners – Snam, Enagas and Fluxys – are examining the prospect of joining DESFA to express joint interest, separate bids from the two sides are considered likeliest. The main reason for this has to do with certain tender rules that restrict the ability of consortiums participating in the first round to then reshuffle, if needed.

Pricing policy regulations expected from RAE, the Regulatory Authority for Energy, ahead of binding offers, will be crucial to how the tender plays out as these rules will determine the project’s earnings potential and level of bids.

RAE given 5 months to set Kavala underground gas storage charges

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RAE, the Regulatory Authority for Energy, has been given five months to determine the pricing policy, regulated earnings and WACC for a planned underground gas storage facility at a depleted offshore gas field in the south Kavala region, according to an imminent joint ministerial decision, energypress understands.

The launch date of the project’s tender will depend on funding for project studies through the EU’s Connecting Europe Facility (CEF) program. This essentially means that the privatization fund TAIPED will need to officially launch the project within the first half of this year to avoid missing out on CEF funds.

The project’s investment cost is estimated at between 300 and 400 million euros.

France’s Engie as well as Energean Oil & Gas and GEK-Terna have formed a three-member consortium named Storengy in anticipation of the tender. DESFA, the gas grid operator, is also expected to participate in the tender.

The project, promising gas storage capacity of 360 million cubic meters, is considered vital for Greece as it will be able to maintain strategic reserves for considerable time periods.

Its development will help boost the performance level and strategic role of the Revythoussa LNG terminal just off Athens, and the prospective Alexandroupoli FSRU in the country’s northeast, as these will be able to supply the wider region greater gas quantities via the IGB and TAP gas pipelines.

The south Kavala project has been classified as a PCI project, offering EU funding opportunities, seen as crucial for the investment’s sustainability, according to some analysts.

Kavala underground gas storage tender in first half of 2020, TAIPED announces

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A tender for the conversion of a depleted natural gas field in the offshore South Kavala region into an underground gas storage facility will be announced in the first half of 2020, according to privatization fund TAIPED.

The project, estimated to cost between 300 and 400 million euros, is needed for storage of strategic gas reserves.

Steps that will need to be taken in the lead-up to the tender have just been presented by the privatization fund’s administration, confirming that previous legal complexities have now been resolved.

Two steps are needed. A joint ministerial decision must be issued. Also, RAE, the Regulatory Authority for Energy, needs to prepare a regulatory framework offering prospective investors a reliable estimate on earnings they should anticipate, necessary before any binding bids can be submitted.

France’s Engie as well as Energean Oil & Gas and GEK-Terna have formed a three-member consortium named Storengy in anticipation of the tender. DESFA, the gas grid operator, is also expected to participate in the tender.

Ministry amendment to unblock Kavala storage legal complexity

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The energy ministry has prepared a legislative amendment needed to overcome a legal complexity that has emerged concerning the development of an underground gas storage facility in the offshore South Kavala region through the utilization of a depleted natural gas field.

The amendment, which could be submitted to parliament today, will not lead to any fundamental changes concerning the project but purely focuses on resolving the legal obstacles obstructing its development, sources informed.

Once ratified, this amendment will pave the way for the publication of a related joint ministerial decision in the government gazette ahead of the asset’s eventual privatization.

Meanwhile, RAE, the Regulatory Authority for Energy, needs to prepare general guidelines determining the project’s pricing policy, regulated earnings, WACC level, as well as a minimum capacity level that will need to be kept vacant by the project’s investor for national energy security reasons.

RAE will have three months to prepare the guidelines once the joint ministerial decision has been published in the government gazette.

TAIPED, the privatization fund, has received an amount worth 1.6 million euros from the European Commission’s Connecting Europe Facility (CEF) to finance engineering studies required for the underground gas storage facility ahead of the privatization tender. This financial development was included in a updated Asset Development Plan (ADP) presented by TAIPED a fortnight ago. The investment’s cost is estimated between 300 and 400 million euros.

France’s Engie, Energean Oil & Gas and GEK-Terna have formed a three-member consortium named Storengy in anticipation of the tender. DESFA, the gas grid operator, is also expected to participate in the tender.

Legal details delay ministerial decision for gas storage facility

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A joint ministerial decision concerning the operating regulatory framework for a prospective underground gas storage facility in the offshore South Kavala region has been held back by a latest administrative obstacle.

The decision, prepared by the energy ministry, has been put on hold until legal details are resolved, sources noted.

Despite the emergence of this latest hurdle, the ministry will soon be in a position to clear it, energy minister Costis Hatzidakis announced yesterday.

Meanwhile, RAE, the Regulatory Authority for Energy, has begun preparing general guidelines to determine pricing policy, adjustable earnings, minimum WACC levels, as well as compulsory vacancy levels that will need to be maintained by the project’s developer as support for national energy security.

Once the joint ministerial decision has been published, RAE will have three months to complete the  framework so that bidders will have its details when the time comes to submit binding offers.

TAIPED, the privatization fund, plans to stage a tender offering the underground gas storage facility within the first six months of 2020.

To be developed at a depleted natural gas field, the underground gas storage facility will offer a storage capacity of at least 360 million cubic meters.

The investment’s cost is estimated between 300 and 400 million euros. France’s Engie, Energean Oil & Gas and GEK-Terna have formed a three-member consortium named Storengy in anticipation of the tender.

DESFA, the gas grid operator, is also expected to participate in the tender.

A total of 642 underground gas storage facilities offering an overall capacity of 333 bcm, approximately 11 percent of global gas consumption, operate around the world. In the EU, 126 such facilities offer a total gas storage capacity of about 80 bcm.

Slight delay, to early 2020, likely for Kavala gas storage tender

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A tender for the utilization of a depleted natural gas field in the offshore South Kavala region as an underground gas storage facility appears headed for a slight delay and could be launched in early 2020, instead of late 2019, as a result of a deadline extension, from August 28 to September 9, granted to participants of a preceding tender looking to appoint a technical consultant for the project.

Besides the preliminary tender’s deadline extension, granted by the privatization fund TAIPED, a still-undelivered co-ministerial decision to determine the operating regulations of the storage facility is another matter that has increased the likelihood of a delay in the project’s competitive procedure. Even so, a launch by late 2019 has not been entirely ruled out.

The technical consultant will be tasked with preparing the tender’s details and offering TAIPED advice on the level of appropriateness of the plan to convert the depleted natural gas field into a gas storage facility, its equipment and interconnection needs, and other matters.

France’s Engie, Energean Oil & Gas and GEK-Terna have formed a consortium named Storengy in anticipation of the project’s tender.

 

Engie, Terna, Energean join for underground gas storage facility

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Three major firms, each specializing in its own respective field, have formed a consortium to seek a contract to develop and operate a depleted natural gas field in northern’s Greece’s offshore South Kavala region as an underground gas storage facility, energypress sources have informed.

Storengy, belonging to France’s Engie group, Energean Oil & Gas, holder of a license for the South Kavala field, and technical firm Gek Terna are the three players joining forces for this contract, to be offered through a tender being prepared by the privatization fund TAIPED.

Greece remains the only country European country without an underground gas storage facility. All others maintain storage facilities covering over 20 percent of their annual natural gas consumption needs. At present, many countries in Europe are planning to develop additional such projects over the next five years.

Underground gas storage facilities play a key role in subduing carbon emissions as a result of the flexibility they offer to renewable energy sources.

Consortium member Storengy is Europe’s biggest developer and operator of underground gas storage facilities. It currently operates 21 such facilities of all types on the continent.

Offering a capacity of between 360 and 720 million cubic meters, or 10 percent of annual natural gas consumption in Greece, the South Kavala underground gas storage facility will require an investment of between 300 and 400 million euros to develop. The project has been granted PCI status by the European Commission, enabling EU funding support.